If you live abroad or have assets outside of the UK, it’s likely that your heirs, or even you, will be affected by the inheritance taxes of more than one country.
Most UK nationals living abroad remain liable for UK inheritance tax on their worldwide assets because they are still seen as a UK domicile, often without realising it.
To make sure your legacy goes to the right place without leaving your heirs a hefty tax bill, you’ll need to understand the rules in the UK and your country of residence and how they interact.
Taxes on gifts
Many countries charge a tax on gifts given within your lifetime, although there may be some exemptions or time-based relief. In the UK, for example, if you survive for at least seven years from the date of a gift to an individual, it may fall out of account for tax purposes.
Different types of taxes on death
France imposes a ‘succession tax’ on residents’ worldwide assets. The tax is paid at a progressive rate by each beneficiary. Rates vary according to their relationship to you and can be very high for ‘non-relatives’:
Spain charges succession and gift tax on Spanish assets or assets passing to Spanish residents. State rates range from 7.65% - 34% but surcharges could increase this to 82% for wealthy recipients not directly related to you. In addition, each ‘Autonomous Region’ applies different reliefs and exemptions, and often different rates of tax.
Portugal and Malta charge a ‘stamp duty’ instead of inheritance tax:
There are no taxes on inheritances or gifts in Cyprus, Gibraltar or Monaco.
Allowances and exemptions
Tax-free allowances can vary greatly depending on your relationship with the heir. It’s often more punitive for less ‘traditional’ families, such as unmarried couples or those with stepchildren:
How we can help with inheritance tax advice
Blevins Franks is highly specialised at advising expatriates on how to legitimately avoid or limit inheritance tax in the UK and your country of residence. We also provide a domicile determination service to establish whether you are still liable to UK inheritance tax.
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